Alchemy Properties is proving this month that it’s feasible to secure bank financing on condominium construction projects in Manhattan, despite industry talk that this market is overheating.
Alchemy and partner the Carlyle Group have reportedly secured a $67.8 million construction loan from M&T Bank for Noma, a 24-story condominium building rising at 50 West 30th Street.
The deal comes just a week after we reported that United Overseas Bank Limited, New York Agency provided $220 million in financing to Alchemy for the condo conversion of the upper floors of the iconic Woolworth Building in Manhattan.
Contrary to reports of slowing condo sales, Alchemy president Ken Horn told The Real Deal that sales have been “very brisk” at Noma, which will include 55 one- to three-bedroom condos starting at $1.4 million.
“Novices are not going to be able to get equity or construction loans in this market,” Horn said. “Lenders are lumping the ultra luxury market with every market — they’re saying, ‘Gee, the market is slow’ — but that’s not the case. The lenders coming in on this realize that this product is priced well for the genre that it’s in.”
At the Keefe, Bruyette & Woods Mortgage Finance Conference in Manhattan earlier this month, executives representing non-banks — including Blackstone Mortgage Trust, Starwood Property Trust, Mack Real Estate Group and Walker & Dunlop — all suggested that their banking counterparts were pulling out of construction lending.
But Stuart Rothstein, CEO of Apollo Commercial Real Estate Finance (ARI), described the banks as “unabatedly moving forward.” To his point, in addition to strong 2015 performance, a recent report from CBRE showed that the banks picked up the pace in Q1 of 2016, accounting for 43 percent of non-agency CRE loan originations, compared to 28 percent in Q1 2015.
Noma is slated to be completed by the end of 2017.